Minnesota Legislature: Health exchange debate takes shape

The terms of debate over health exchanges in Minnesota became a little clearer Monday as Republicans in the state Legislature announced a bill to develop what they described as a free-market alternative to plans from the administration of Democratic Gov. Mark Dayton.

The bill would give individuals access to personal health premium accounts where they could amass funds from a variety of sources to buy health care coverage.

As such, the legislation might help spread insurance coverage to more people with part-time jobs - one of the key groups in the state that currently lacks access to coverage, said Rep. Steve Gottwalt, a Republican from St. Cloud who is sponsoring the bill in the House.

But it's unclear how the idea will be received by Dayton or if it would be sufficient to win certification by the federal government, which by year's end will evaluate the state's planning for a health exchange in Minnesota. The exchange is mandated by federal law and is intended as a new marketplace - largely online - for individuals and small businesses to buy coverage.

"This is not a health exchange," said Sen. David Hann, a Republican from Eden Prairie who is sponsoring the bill in the Senate. "We're just creating a financial instrument...by which people who currently are not insured can be insured."

Health exchanges were mandated by the federal overhaul of the nation's health care system that Congress and President Barack Obama enacted in 2010.

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All states including Minnesota have until the year's end to develop plans for a health exchange that can be certified by the federal government. Otherwise, the federal government can impose an exchange model on states.

Whether the status quo in Minnesota combined with the new bill for personal health premium accounts would be enough for the state to win certification is unclear.

The bill introduced Monday by Republicans, for example, makes no mention of creating a health exchange, yet that's a key part of the federal law, said Larry Levitt, a senior vice president with the Kaiser Family Foundation, a health policy group.

"There are some elements of an exchange that are simply necessary to make the health reform law work," Levitt said. "For example, people are eligible for health insurance tax credits only if they get their coverage through an exchange."

Beyond those questions, it's not at all clear that Republicans and Democrats at the Capitol are moving any closer to a bipartisan approach to health exchanges.

At a news conference Monday, no DFLers backed the plan from Gottwalt and Hann for personal health premium accounts. The event was followed by a news conference on health exchanges where no Republicans joined Rep. Erin Murphy, DFL-St. Paul, and Sen. Jeff Hayden, DFL-Minneapolis, at the podium.

For months, Dayton has been planning a Minnesota exchange with work funded by federal grants in the Commerce Department. Last year, the administration appointed a task force to develop a series of recommendations for how the exchange should operate.

Murphy and Hayden, however, said the bills they introduced Monday would create an exchange with more consumer protections than the plan being developed by Dayton. Whereas the Dayton task force recommended that a "small minority" of board members for Minnesota's exchange be allowed to serve despite having potential conflicts of interest, Murphy and Hayden said they would allow no such conflicts.

"It basically says: Do whatever you need to to comply with the federalization of Minnesota health care," Gottwalt said. "Why are we trying to adopt a federalized approach to health care in Minnesota when in fact we have most of the tools to do what (the federal government) professes to accomplish?"

Kathryn Frommer, a small business owner from Minneapolis, offered something of a response during the news conference for Murphy's bill.

Frommer's family pays nearly $2,000 per month for a policy that covers a family of three and includes a $3,000 deductible. Because her daughter has a pre-existing condition, the Frommer family can't easily change coverage, she said.

The federal reform is important, she said, because the current marketplace makes it tough for self-employed people to shop for coverage. Plus, an exchange as envisioned by Murphy and Hayden would have authority to negotiate prices for individuals and small businesses, Frommer said.

"Like a lot of small businesses, we would also like to be able to provide health care to our employees," she said. "But we also cannot afford to provide coverage and sustain our business."